Convert from 7 to 13

[seanf12]

If you file for a Chapter 7 and the worst case happens and the trustee converts you to a Chapter 13, about when you find that out?

I ask because Chapter 7 is the best option for me, but I have another option that come up (that doesn't involve bankruptcy) that would at least help me avoid Chapter 13 if that was my only option. Are you allowed to dismiss your own bk once you find out you are being converted? If so, what are the consequences of doing that?

Thanks!

[coma]

You cannot arbitrarily dismiss a CH 7. You can, however, voluntarily dismiss a CH 13 should you be placed in one.

I found out I was being converted about a week after my 341, though I was old law.

[seanf12]

Right, but can you voluntariliy dismiss your own BK after you have been told your case is being converted to a Ch 13?

[coma]

Right, but can you voluntariliy dismiss your own BK after you have been told your case is being converted to a Ch 13?

As far as I know, you cannot dismiss a 7 voluntarily. Meaning, if you were told you will convert, but have not actually been converted, then you are not officially CH 13, and cannot voluntarily dismiss, as you are still 7.

[CATCHMEIFYOUCAN]

Why would you want to dismiss your BK. Your credit is already shot! Its not going to drop off your credit history for like 8-10 years. I'm assuming if you are going to convert from 7-13 the Trustee sees that you are capable of paying back some of the credit. Your not going for one of those debt consolidation programs are you? Or did you come into some money to be able to pay off your debt. I guess my point is, its easier to convert from 13 to a 7 (like I went through), I don't know how it is the other way around (7 to a 13).

Regards, Catchmeifyoucan

[coma]

Why would you want to dismiss your BK. Your credit is already shot! Its not going to drop off your credit history for like 8-10 years. I'm assuming if you are going to convert from 7-13 the Trustee sees that you are capable of paying back some of the credit. Your not going for one of those debt consolidation programs are you? Or did you come into some money to be able to pay off your debt. I guess my point is, its easier to convert from 13 to a 7 (like I went through), I don't know how it is the other way around (7 to a 13).

Regards, Catchmeifyoucan

It's not too hard to go 7 to 13 if you have an attorney to do the paperwork.
In a 13, you have to pay, but you are still under the protection of the court. Also, if you convert voluntarily, you can go back (at least you could in old law times), to a CH 7 if the situation changes. I was able to do that.

If you dismiss, the consequences are that your creditors will return with a vengance, meaning there will be intereest and fees added on. You said you have a way to avoid BK...that's great, but like catch me said, once you finle, there's no do-over. It's on your credit, dismissed, discharged, or not...

[seanf12]

Nope, not doing a debt settlement company or anything like that. A relative has offered to loan us enough money ($50k) to at least pay for half of our unsecured debts. We would still be making payments on the other half, along with payments to our relative. Even with the loan, our budget would still be tight, and that is just making minimum payments. It would take us several years to even make a dent in the debt. Chapter 7 would be the best solution, but taking the loan is the next best option, and I think better than a Chapter 13 in our situation. My biggest fear would be to get converted.

Right now with preliminary figures, our attorney ha told us we pass the means test and our schedule I & J shows us with negative income (by about $60) every month. According to her the expenses she used was conservative and would not throw up any red flags for a family of 5.

We wouldn't be able to file until June due to some cash advances I recently took out to cover living expenses,and I am guessing that our living expenses will only be going up as the summer approaches (particularly gas). We are not expecting any increases in income over the next several months

I guess the decision I am struggling with is whether or not to go for it and hope we don't get converted, or go with the loan from our relatives.

[seanf12]

And on top of this, the attorney believes our case would probably get audited due to the fact that my total income is around $99k annually. But according to her, it would primarily be to make sure we haven't purchased any luxury items in the past year prior to filing (which we haven't)

[CATCHMEIFYOUCAN]

I would weigh out the pros and cons. Borrowing from a relative and/or a friend can after damaging effects on the relationship if in the end things just aren't making ends meet. Anything can happen in life. And if things don't work out and you end up filing, that could just make things even tighter for you. When I was contemplating BK I was getting myself into all kinds of consolidation loans to keep up with the creditors, in the end I was just getting deeper and deeper and part of it was my fault because of my gambling addiction.

Good Luck, Catchmeifyoucan

[Rover]

Based on the info you provided, my advice is to not take the loan from the relative to pay unsecured debts. In fact, under no circumstances would I do that if I were in your shoes.

[diviaruba]

... We would still be making payments on the other half, along with payments to our relative. Even with the loan, our budget would still be tight, and that is just making minimum payments. It would take us several years to even make a dent in the debt.

This is key. If you are making the loan payments to the relative, and paying down the other debts (at whatever outrageous interest rate you may have), and not making a dent, why would you be so fearful of the 13, which would, in the worst case, have your debt discharged in 60 months at a capped interest rate?

While 13 budgets can be tight, and no one likes the scrutiny of their life for 5 years, you have to honestly assess what life will be like at the end of 60 months, and whether you'd be better off then with your debts discharged. Arguably, I'd still file and take my chances.

[seanf12]

Thanks everyone for your replies so far. I completely agree with what you are saying. I am going to call my lawyer again today to try and get a feel for the chances of us being converted.

We have 3 small children (ages 3, 3 and 6), and our #1 priority is to make sure that whatever we do, the impact is minimal at worst. I guess we are still holding onto the dream of taking our kids to Disney while they are still at that age, stuff like that.

The other aspect is my wife...we have been told by one attorney that is she goes to work after we are confirmed on a Ch 13, the plan would need to be amended and she would be working for essentially nothing. If she doesn't go to work, that means she essentially has to sit home for 5 years.

On top of all of this, our automobiles come into play. My wife's car is a lease which would expire a few years from now (i.e. in the middle of the bankruptcy), along with my car being on its last legs. So sometime during our Ch 13, we will both need to replace our vehicles

[seanf12]

Just discovered that my lawyer has been practicing for 18 months. Ouch.....

Also just discovered that my car has finally died. If I buy a new one now, is there a chance I would lose it in a Chapter 7 case?

[CATCHMEIFYOUCAN]

I bought a car just a month before my filing I HAD TOO my Honda got flooded. I just had to prove 1 if not 2 payments on the newly acquired loan. DO THIS BEFORE YOU FILE !

Catchmeifyoucan

[seanf12]

That's my plan...going to look for a car tonight.

I have a family of 5, and I already lease a minivan at $396/month (I am current on it). If I purchase another car, will that raise an issue when filing for a Chapter 7? I am guessing it only help, as it's another expense for the means test (but I could be wrong)